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    Marsh Posts 2Q Loss, Hires Merrill Lynch to Explore Possible Sale

    INDIANAPOLIS -- Marsh Supermarkets here posted a second-quarter loss of $3.4 million, reversing a year-ago profit of $1.3 million, and said it has retained Merrill Lynch & Co. to explore strategic alternatives to enhance shareholder value, including a possible sale.

    INDIANAPOLIS -- Marsh Supermarkets here posted a second-quarter loss of $3.4 million, reversing a year-ago profit of $1.3 million, and said it has retained Merrill Lynch & Co. to explore strategic alternatives to enhance shareholder value, including a possible sale.

    During the quarter ended Oct. 15, Marsh's revenue rose 5 percent, from $524.6 million to $549.6 million. Same-store sales rose 3.6 percent, while same-store merchandise sales fell 0.7 percent, excluding gasoline sales.

    The company attributed the second-quarter loss to lower contributions from stores open during the first and second quarters, startup and operating losses of new stores, and higher general and administrative expenses that increased 7 percent, to $150.3 million, from last year.

    Marsh said it has suspended its dividends on common stock until its financial performance improves, and has entered into a new five-year, $95 million revolving credit facility with lenders led by Bank of America.

    "We are clearly disappointed with the loss reported for the quarter," said Don E. Marsh, chairman and c.e.o., in a statement. "The positive developments of recording our sixth consecutive quarter of increases in sales from comparable stores and the new credit facility were outweighed by a number of negative factors."

    "During the past several months, management has been working diligently to reduce costs during a time of increasing competition, and while we believe our initiatives will improve profitability, our responsibility is to consider the best interests of our employees, the communities we serve, and, above all, our shareholders," continued Marsh. To that end, one of the strategic alternatives includes a possible sale "to the right party. For this reason, we have authorized Merrill Lynch to investigate the potential of such a transaction as an integral part of our considerations," he noted.

    Marsh said the company doesn't expect to comment further unless its board approves a transaction.

    Marsh operates 70 namesake supermarkets, 38 LoBill Foods stores, eight O'Malia Food Markets, 160 Village Pantry convenience stores, two Arthur's Fresh Market stores, and one Savin$ store in Indiana and Ohio. The company also operates Crystal Food Services, which provides upscale catering; cafeteria management; office coffee; coffee roasting, vending, and concessions; and restaurant management, and Primo Banquet Catering and Conference Centers, Floral Fashions, McNamara Florist, and Enflora -- Flowers for Business.

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